By Sean Lange Have the United States’ most powerful e-commerce site and the world’s most profitable physical retailer strayed from the sales strategies that they symbolize?
In July 2017, Amazon announced that it would be purchasing Whole Foods Market, the 431-store supermarket chain with the widest offering of organic groceries in the nation, for $13.7 billion. Previously, the company’s most popular services are delivered digitally, to much acclaim. In addition to its eponymous, all-encompassing “e-tail” site, Amazon streams original entertainment content via Amazon Studios, licenses data collection, analysis, and Cloud storage software through Amazon Web Services, and home-delivers groceries and meal kits to AmazonFresh subscribers. In the fall of 2016, Walmart spent $3.3 billion to purchase the Hoboken, NJ-based Jet.com, a phenom website for selling consumer goods and food supplies. Walmart, with over 11,500 brick-and-mortar locations worldwide, is the largest retailer and employer in the world, and topped the Fortune 500 rankings in 2016 with $486 billion in revenue. It also held 25% of the U.S. grocery market during that year. At the end of 2017, Amazon and Walmart are now suddenly the two most rapidly growing, disruptive companies in the United States, and have achieved that status by recognizing the supply chain benefits conferred by both physical and online destinations. With their respective expansions in retailing kitchen staples serving as a parable, Amazon and Walmart are sustaining their core competencies -- Amazon’s leading $138 billion in online revenue, and Walmart’s unmatched 11,000 global stores -- while pursuing a hybrid “clicks-and-mortar” strategy. The opportunity for the two dimensions of retail to complement each other was laid out on Black Friday 2017. On the most celebrated day of the year for physical retailers, the overall single-day U.S. sales record was shattered at over $3.05 billion. Amazon accounted for 50% of the $1.2 billion of that goal grossed in mobile transactions; while Walmart reported only a 1.6% decline in in-store foot traffic year-over-year, hardly cataclysmic in the context of the boom in online deals now offered on the same day. Such multi-dimensional consumerism is an important aspect of how both Amazon and Walmart have embraced their counterintuitive delves into brick-and-mortar sales and e-commerce sales, respectively. In November 2017, Amazon reported that all Whole Foods locations had been equipped with kiosks for the Amazon Echo and Echo Dot, home speakers which recommend Amazon-exclusive goods for 17% of all merchandise inquiries. For Amazon, Whole Foods is now a quintessential part of its supply chain, allowing customers to more frequently order and be delivered Amazon products. For Walmart, the e-commerce venture initiated by Jet.com enabled the epitome of its strategy towards differentiation. While traditionally known to serve low-income buyers in physical stores, Walmart announced in October 2017 that it would be partnering with Lord & Taylor, to exclusively sell the high-end apparel on its e-commerce website. Amazon and Walmart both have a clear mission in mind. Either retailer today defines success as becoming the global leader in overall sales, or being the automatic destination that every consumer will go to, any time, to buy any product. For Walmart, accomplishing this status means preserving its “everyday low prices” and family friendly image in its physical stores, while quickly and carefully developing its online platforms. For Amazon, world domination entails continuing its pattern of skyrocketing digital growth -- with sales expected to increase around 30% each year -- while transforming tactical brick-and-mortar outlets into influential components of its data-driven supply chain. This click-and-mortar formula has high potential for catalyzing growth in Walmart and Amazon -- and has prompted steps upward for the two iconic retailers, not to the side.
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12/27/2023 10:20:19 am
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